third quarter earnings presentation...3q 2020 segment revenue and segment summaries 4 october 22,...

© 2020 Valmont® Industries, Inc.

Valmont Industries, Inc. Third Quarter Earnings Presentation

October 22, 2020

Disclosure Regarding Forward-Looking Statements

These slides contain (and the accompanying oral discussion will contain) “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to differ materially from the results expressed or implied by such statements, including general economic and business conditions, conditions affecting the industries served by the Company and its subsidiaries including the continuing and developing effects of COVID-19 including the effects of the outbreak on the general economy and the specific economic effects on the Company’s business and that of its customers and suppliers, competitor responses to the Company’s products and services, the overall market acceptance of such products and services, the integration of acquisitions and other factors disclosed in the Company’s periodic reports filed with the Securities and Exchange Commission. Consequently such forward-looking statements should be regarded as the Company’s current plans, estimates and beliefs. The Company does not undertake and specifically declines any obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

October 22, 2020 | Valmont Industries, Inc. | 3Q 2020 Earnings Presentation2

| Valmont Industries, Inc. | 3Q 2020 Earnings PresentationOctober 22, 20203

STEVE KANIEWSKIPRESIDENT & CHIEF EXECUTIVE OFFICER

3Q 2020 Segment Revenue and Segment Summaries


Solid Third Quarter Pricing and Operating Performance

• Higher volumes across all product lines• Global Transmission sales growth driven by ongoing

grid-hardening efforts by utilities and strengthening demand for renewable energy sources

• Strategic capacity additions in existing facilities• Higher global generation sales led by significantly

higher project sales of solar tracker products• Large utility project in Northern Europe drove sales

growth

• Lighting and traffic product sales down 5.1% YoY‒ North America: lower volumes in transportation and

commercial lighting markets‒ International: end-market disruptions from COVID-19

impacts, primarily in India• Wireless communication sales grew 4.8% from

higher project sales in Europe and favorable pricing; capital spending from N.A. wireless carriers drove demand and ramp of 5G buildouts in line with expectations

• Access Systems sales were lower YoY driven by strategic decision to exit certain product lines

• Higher internal volumes, pricing and higher international market volumes, were more than offset by lower volumes in N.A. as a result of COVID-19 economic impacts on end customers

• Higher irrigation system volumes more than offset by lower volumes of other products including tubing

• International sales grew driven by strong sales in Brazil, improved market conditions in Australia and higher sales in European markets in addition to strategic acquisition of Solbras

• Brazil: another record quarter of sales in local currency; expect continued strong market demand

• $240M multi-year agreement for a 500,000-acre ag project in Egypt – once completed, farm will become largest Connected Farm of Engaged Acres globally

SEGMENT SUMMARIES

TOTAL 3Q 2020 REVENUE: $734.0M

$274.4M $255.7M $87.9M $139.2MUtility Support

Structures Engineered Support

Structures Coatings Irrigation

N.A.: $75.8M | International: $63.4M

37.4% of Sales 34.8% of Sales 12.0% of Sales 19.0% of Sales

Future Impact of COVID-19 Varies Across Diversified Portfolio


Carefully and Strategically Plan for Different Scenarios and Focus on Execution

Valmont FY2019 Segment Operating Income ($M)

Estimated Risk Profile Due to COVID-19

Lower Moderate Increased

Utility$87.8

Irrigation$71.7

Coatings$51.0

ESS$65.6

UTILITY• Supports critical infrastructure sector (Energy) to help ensure

uninterrupted electricity supply and power restoration• 85% of segment revenue is from North American markets where

utilities are indicating that construction and generation projects will continue

• Renewable energy markets could be impacted due to uncertainty of debt funding and impact on return profiles

IRRIGATION• Supports critical infrastructure sector (Food and Agriculture) to meet

ongoing demands of the global food supply• Disruptions to food supply chains have moderated; a less dire outlook

for ethanol supply• North American market is at trough-like levels and demand remains

highly correlated to net farm income levels• No additional COVID-19-related risks are expected to impact

international market demand at this time• Mandated government closure of factories in Argentina and South

Africa impacted 2Q but all have resumed operations to pre-COVID levels

ESS• Variety of demand drivers across multiple product lines and

geographies• Increased demand for wireless communication structures and

components, as they support a critical infrastructure sector (Communications) and emergency/first responders and at home work/school mandates

• Long-term, lighting and traffic structures demand could be impacted by changes to transportation budgets caused by COVID-19 effects

• Commercial and residential construction delays could reduce commercial market demand

• Mandated government closure of factories in France, India, Malaysia, and Philippines impacted 2Q but all have resumed operations to pre-COVID levels

COATINGS• Global correlation to industrial production levels and general

economic indicators• Mandated government closure of facilities in India, Malaysia, New

Zealand, and Philippines impacted 2Q but all have resumed operations to pre-COVID levels

Elevating our Commitment to ESG


Dedicated to being a More Sustainable Organization by Advancing ESG as a Strategic Priority

2019 & 2020 Notable Accomplishments

2020 Board Appointments

• Established 1st global electricity goal to reduce our global electricity consumption by 8% over two years

• Completed 2018 assurance of disclosures for Scope 1 and 2 Greenhouse Gas Emissions; combined reduction of 4.0% YOY

• Awarded the Nebraska Recycling Council Member of the Year for outstanding efforts to promote recycling in Nebraska

• Recognized our Jasper, Tennessee manufacturing facility with the 2019 Sustainability Award for dramatic improvements in key sustainability and employee engagement metrics

• Launched an EV program to replace 100+ gas-powered vehicles at largest manufacturing facility by 2021

• Finalized plans to install a one-megawatt solar field at our Valley, Nebraska campus that will generate carbon-free power for on-campus usage utilizing our own TRJ tracker solution

• Joined the U.S. Department of Energy’s Better Plants Program, increasing our commitment to energy efficiency and savings across our facilities

Conserving Resources, Improving Life® is at the Core of the Products and Service that we Provide to Support Sustainable Infrastructure Development and Efficient Use of Water for Agriculture

RITU FAVRESenior Vice President & GM,National Instruments Corporation

JOAN ROBINSON-BERRYRetired SVP & Chief Engineer,The Boeing Company

AVNER APPLBAUMEVP & CHIEF FINANCIAL OFFICER


3Q 2020 Financial Summary


Revenue Operating Income Diluted EPS6.3% 0.7% | 9.9%1 5.1% | 13.7%1

• Significantly higher Utility Support Structures sales and improved international market demand

• Lower sales in Engineered Support Structures and Coatings segments due primarily to end-market disruptions from COVID-19 impacts, and lower Irrigation sales due to unfavorable currency impacts

• Operating income improvement is attributed to favorable pricing and improved operational efficiency

• Adjusted tax rate of 25.0% comparable to last year

$M, except for per share amounts

$734.0

$690.3

2020 2019

$61.5 $67.1

$61.1

2020 2020 Adj. 2019

$1.84 $1.99 $1.75

2020 2020 Adj. 2019

1 Results adjusted to reflect impact of non-cash impairment of goodwill and/or certain restructuring expense recognition. See reconciliation of GAAP results to adjusted results at end of document.

11

Revenue Operating Income

3Q 2020 Results | Utility Support Structures


($M)

Key Statistics2019 Revenue1 $ 204.2

Volume 83.2

Pricing/Mix (17.2)

Acquisitions/Divestiture 1.7

Currency Translation 0.6

2020 Revenue1 $ 272.5

$272.5 $204.2

2020 2019

$25.9 $29.2 $20.4

2020 2020 Adj. 2019

COMMENTARY• Sales grew 33.9% YoY led by higher sales in the international businesses, including significantly higher solar tracker project sales while in the North American markets,

sales growth was driven by continued robust market demand, strategic capacity additions and favorable pricing partially offset by deflation due to lower steel costs• Operating income was higher YoY driven by:

‒ Higher volumes‒ Improved operational performance‒ Pricing discipline

2

1 Net sales after intersegment eliminations. 2 Results adjusted to reflect impact of non-cash impairment of goodwill and/or certain restructuring expense recognition. See reconciliation of GAAP results to adjusted results at end of document.


3Q 2020 Results | Engineered Support Structures


($M)


Volume (17.2)

Pricing/Mix 2.5

Acquisitions/Divestiture -


2020 Revenue1 $ 255.0

$255.0 $266.5

2020 2019

$25.4 $26.3 $21.8

2020 2020 Adj. 2019

2

COMMENTARY• Higher sales of wireless communication products more than offset by lower volumes of lighting and traffic products and lower Access Systems sales• Lighting and traffic sales decreased 5.1% YoY

‒ North America: lower transportation volumes and weak commercial lighting market demand‒ International: economic disruptions from COVID-19 impacts, which impacted end-market demand

• Sales of Access Systems products were lower YoY driven by volumes from strategically exiting product lines• Profitability improvement driven by favorable pricing, improved operations performance and non-recurrence of one-time losses in Access Systems business in 3Q19



3Q 2020 Results | Coatings


($M)


Volume (8.9)

Pricing/Mix -

Acquisitions/Divestiture -


2020 Revenue1 $ 68.7

$68.7 $76.9

2020 2019

$12.4 $13.7 $13.9

2020 2020 Adj. 2019

2


COMMENTARY• Sales decreased 5.5% YoY• Higher internal volumes and favorable pricing were more than offset by lower external volumes in North American markets due to COVID-19 impacts on end customers• Operating margin improvement on an adjusted basis was due to improved operational efficiencies and favorable pricing, partially offset by lower volumes

Revenue Total Operating Income

3Q 2020 Results | Irrigation


($M)


Volume 2.9

Pricing/Mix (2.1)

Acquisitions/Divestiture 0.6

Currency Translation (6.3)

2020 Revenue1 $ 137.8

14.7$18.2

2020 20192020 2019

$74.4 $63.4 $81.4

$61.3

North America International

1 Net sales after intersegment eliminations.

COMMENTARY• Global sales decreased 3.4% YoY primarily due to unfavorable currency impacts of $6.3M mostly from depreciation of the Brazilian Real, otherwise sales were like last year

‒ North American sales down 8.5% YoY; higher irrigation system volumes were more than offset by lower volumes of other products including industrial tubing sales‒ International sales increased 3.3% YoY and increased ~13.7% excluding unfavorable currency impacts; sales growth led by higher sales in South American

markets including continued strong demand in Brazil, higher sales in Europe and Australia, and sales from recent acquisitions• Lower profitability due to lower sales volumes, partially offset by pricing; higher SG&A expense included $1.2M of incremental R&D expense for technology growth

investments• Announced a $240M, multi-year supply agreement to bring modern irrigation and technology solutions to the Egyptian market

3Q 2020 Cash Flow Highlights


Strong Operating CF Driven by Higher Operating Income and Strategic Working Capital Management

($M)

YTD09/26/2020

Net Cash Flows from Operating Activities $ 273.0

Net Cash Flows from Investing Activities (71.4)

Net Cash Flows from Financing Activities (110.0)

Net Cash Flows from Operating Activities $ 273.0

Purchase of Property, Plant & Equipment (71.0)

Free Cash Flows $ 202.0

3Q YTD Cash Flow | FCF Reconciliation Cash and Debt Highlights

$443.1M($221.7M ex-U.S.)

Cash at 09/26/2020

$779.8MTotal Long-Term Debt at 09/26/2020

Balanced Approach to Capital Allocation


($M)

$71

$16

$28 $27

CapitalExpenditures

Acquisitions ShareRepurchases

Dividends

2020 YTD Capital Deployment: $142MCapital Expenditures

• Working capital investment to support investments in people, technology and systems

• 2020 CapEx expected to be $85M - $95M

Acquisitions• Strategic fit + market expansion• Returns exceeding cost of capital within 3 years• Amount excludes $56M purchase of non-controlling

interest of AgSense and Convert Italia

ShareRepurchases

• Opportunistic approach, supported by FCF• Resumed share repurchases on September 10, 2020• $176M remains on current authorization as of 09/26/20

Dividends• 20% dividend increase announced February 2020• Payout ratio target: 15% of earnings• Current payout: 21%

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Strong Balance Sheet and Liquidity to Endure COVID-19 Uncertainty


Cash ~$443.0MTotal Debt (Long-Term) $779.8MShareholders’ Equity $1,189.7MTotal Debt to Adj. EBITDA1 2.3xNet Debt to Adj. EBITDA1 1.0x

Available Credit under Revolving Credit Facility2 $543.0MCash ~$443.0MTotal Available Liquidity ~$986.0M

AS OF SEPTEMBER 26, 2020

► Long-term debt of $779.8M, mostly fixed-rate, with long-dated maturities to 2044 and 2054

► Capital allocation strategy has not changed, and the primary focus is to maintain liquidity to support operations and maintain investment grade credit rating

− 2020E CapEx expected to be $85M - $95M− S&P reaffirmed BBB+/Stable credit rating during third quarter

− FCF expected to be positive due to stable costs of energy and raw material, possibly offset by lower revenue

− Share repurchases resumed on September 10, 2020

1 See slide 31 for calculation of Adjusted EBITDA and Leverage Ratio. 2 $600M Total Revolver less borrowings and Standby LC”s of $57M.

01 02 03 04Using advanced technology and automation to streamline processes, redeploy capital and people to more strategic and innovative opportunities

Deploying data science capabilities and leveraging AI and ML to develop a quantitative, research-based approach to forecasting and real-time decision making

Improving working capital by executing on strategic priorities

Developing Centers of Excellencefocused on talent development and expanding our use of shared services

Focus Areas of Our Finance Function Transformation


Evolving Finance Function to Improve ROIC and Maximize Long-term Stakeholder Value

4Q 2020 Outlook and Assumptions


4Q20 OUTLOOK1 KEY ASSUMPTIONS

• Irrigation: revenue estimated to increase ~ 12% - 15% YoY due to expected timing of international project deliveries

• Expect tax rate of ~25.0%

• Expect positive operating cash flows

• Anticipate stable raw material costs and assume no significant supply chain interruptions

• Presume no closures of large manufacturing facilities or significant workforce disruptions due COVID-19

$715M – $735MNet Sales

1 Excludes potential future restructuring activities. See reconciliation of GAAP outlook to adjusted outlook at end of document

6.5% – 7.5%GAAP Operating Profit

Margin

8.0% – 9.0%1

Adjusted Operating Profit Margin

4Q 2020 Segment Market Trends and Potential Risks


Consistent Solid Cash Flow Generation Expected in 4Q

USS • Strong backlog and benefit of capacity additions provides good visibility to 4Q in North America• Mild risk associated with some international projects, which has been accounted for in guidance range

ESS

• Backlog is providing good visibility to 4Q lighting and traffic sales• Solid long-term market trends for both transportation and wireless communication structures• Expect normal 4Q seasonality, which can cause more uncertainty in timing of sales• International markets expected to be slightly down YoY due to ongoing economic effects from COVID-19, primarily across Europe and India• Access systems revenues expected to be similar to first three quarters of this year; profitability has improved during 2020, has been accounted in outlook

COATINGS • End-market demand correlates closely to industrial production levels; expect a modest improvement in demand as those levels continue to recover

IRRIGATION

• Encouraged by recent commodity price increases and optimistic trends will be positive for overall grower sentiment• Expect net farm income levels to not improve in the near term• Expect segment sales to increase 12-15% compared to 4Q19 based on estimated timing of deliveries of the large Egypt project; project operating margins

expected to be similar to previous larger international irrigation projects

Fundamental Market Drivers Remain Resilient


No Change Anticipated in the Near- and Long-term

COATINGS IRRIGATION

• Business closely follows industrial production trends and general economic activity

• Global preservation of critical infrastructure over the long-term

• Increased number of economies actively fighting costs of corrosion will drive need to extend life of steel products globally over the long-term

• Fits well within ESG principles

• Our mission-critical products and technology supports the demand for increased food production and security to support growing populations globally

• Increasing international demand for food security and agriculture land development creates opportunity for large projects including recent multi-year Egypt project

• Long-term drivers supported by‒ Water usage and other farm input

optimization‒ Mitigation of increased labor costs‒ Support of growers’ conservation

efforts

• Continued government investments in infrastructure development across lighting and transportation markets‒ FAST Act and Highway Trust Fund

‒ Europe & Australia: recent announcements in infrastructure stimulus packages

• Growth in wireless communication products and components, particularly in 5G; expected to accelerate given work and school athome environment‒ COVID-19 has elevated critical

need for wireless connectivity in rural areas

‒ Recently joined American Connection Project Broadband Coalition

• Robust backlog demonstrates ongoing demand and necessity for grid hardening and renewables

• Growth supported by strong returns on equity for both public and private utilities

ESSUSS

Strong performance through the first nine months of 2020 is a testament to our team’s ability to remain positive, flexible and committed to delivering strong results despite current market environment

Advancing adjacent market growth and technology leadership through strategic investments and by leveraging long-term, enduring growth drivers across all segments

Long-term strategic framework remains intact and is not expected to change despite market uncertainty; continued focus on profitable growth and ROIC as we position the company for success now and in the future

Summary


Outlook for Remainder of 2020 Reflects Strong Operating Performance and Resiliency of All Stakeholders

01

02

03

Q&A


APPENDIX


Third Quarter and YTD 2020 Financial Summary

Net Sales 2020 2019 Change YTD 2020 YTD 2019 ChangeEngineered Support Structures $ 255.7 $ 268.1 (4.6%) $ 739.8 $ 757.1 (2.3%)

Utility Support Structures 274.4 205.0 33.9% 731.2 658.7 11.0%

Coatings 87.9 93.0 (5.5%) 256.0 278.1 (8.0%)

Irrigation 139.2 144.1 (3.4%) 446.5 452.2 (1.2%)

Intersegment Sales (23.2) (19.9) NM (76.5) (62.7) NM

Net Sales $ 734.0 $ 690.3 6.3% $ 2,097.0 $ 2,083.4 0.7%

Operating Income $ 61.5 $ 61.1 0.7% $ 171.8 $ 177.1 (3.0%)

Adjusted Operating Income1 $ 67.1 $ 61.1 9.9% $ 199.7 $ 177.1 12.7%

Net Income (loss) $ 39.3 $ 38.0 3.4% $ 104.9 $ 113.9 (7.9%)

Adjusted Net Income1 $ 42.7 $ 38.0 12.2% $ 128.4 $ 113.9 12.8%

Diluted Earnings (loss) Per Share (EPS) $ 1.84 $ 1.75 5.1% $ 4.89 $ 5.22 (6.3%)

Adjusted Diluted (EPS)1 $ 1.99 $ 1.75 13.7% $ 5.99 $ 5.22 14.8%

$M, except for per share amounts

1 Please see Reg G reconciliation of non-GAAP financial measures to GAAP measures at end of the document.


State Transportation Investment Funding Measures

Source: Transportation Investment Advocacy Center| Valmont Industries, Inc. | 3Q 2020 Earnings PresentationOctober 22, 202024

• Six states have approved 13 transportation investment measures to-date in 2020

• Highlights:− 38 bills have advanced beyond one chamber, while 133 bills are still

in the introductory stage.− 13 states introduced legislation to increase their motor fuel tax, eight

of which included a component to adjust or convert to a variable-rate formula.

− One-time funding has been the most popular legislation (68 bills, primarily in Arizona and Minnesota), followed by local funding and recurring revenue measures (24 and 25 bills, respectively).

− Road usage charge legislation has been proposed in six states, and new or increased electric vehicle fees have been proposed in five states.

− Approved measures include bonds in Connecticut, Michigan and Minnesota, and a state gas tax increase in Virginia.

• Funding Approved in 2020 Legislative Session: $5,098,012,304

https://transportationinvestment.org/research/reports/

Source: IHS Markit| Valmont Industries, Inc. | 3Q 2020 Earnings PresentationOctober 22, 202025

State NameChange in 2020 Gas Tax

(cents/gallon)Effective Date

Kentucky 10.0$ Proposal PendingNew Jersey 9.3$ 10/1/2020Alaska 8.0$ Proposal PendingArizona 6.0$ Proposal PendingMassachusetts 5.0$ Proposal PendingVirginia 5.0$ 7/1/2020Georgia 4.0$ 1/1/2020Nebraska 3.9$ 7/1/2020California 3.2$ 7/1/2020Wyoming 3.0$ Proposal PendingAlabama 2.0$ 10/1/2020Oregon 2.0$ 1/1/2020South Carolina 2.0$ 7/1/2020Utah 1.1$ 1/1/2020Florida 1.0$ 1/1/2020Indiana 1.0$ 7/1/2020Illinois 0.7$ 7/1/2020Washington 0.6$ Proposal PendingNorth Carolina (0.1)$ 1/1/2020Iowa (0.5)$ 7/1/2020Maryland (0.7)$ 7/1/2020

State Transportation Investment Funding Measures

Australia Infrastructure/Federal Budget 2020-21

Key Announcements


Access Deloitte Report Here

“Long road back” Federal Budget 2020-21 sees additional and accelerated funding for all infrastructure sectors, targeting shovel ready projects

Additional $4.5B in NBN for ultra-fast broadband services

$250M to accelerate electricity transmission links (Marinus Link, Project Energy Connect, VNI West)

$3B allocated to small scale road safety upgrades and local council road, footpath and street lighting programs

$2B for new projects under the National Water Infrastructure Development Fund

$250M, over four years, for the modernization of infrastructure to reduce waste and increase recycling

$250M for the fuel security plan including onshore diesel storage

Consistent with Federal Budget 2019-20, funding commitments include investments to optimize existing assets as well as funding for the planning to create a pipeline of future projects

http://images.content.deloitte.com.au/Web/DELOITTEAUSTRALIA/%7B8845ffe6-c5c3-4f52-82d3-4568646ca5b9%7D_Federal_Budget_2020-21_-_Infrastructure%5b1%5d.pdf?elq_mid=4108&elq_cid=257274

U.S. Corn for Fuel Ethanol, Feed, and Other Use


5.435.61

5.384.85

0

2

4

6

8

10

12

14

Dom

estic

Use

(Bill

ion

Bus

hels

)

Year

Used for Ethanol

Feed and Residual Use

Produced for Other Uses

Source: afdc.energy.gov/data – data from Tables 4 & 31, OCT2020Years run from September through AugustExports not included in above values

U.S. Net Cash Farm Income by Year


2010-2019 Historical Free Cash Flow1


10 Year Average FCF is $144M; Last 5 Years Has Averaged $153M

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Net cash flows from operating activities $ 152.2 $ 149.7 $ 197.1 $ 396.4 $ 174.1 $ 272.3 $ 232.8 $ 133.1 $ 153.0 $ 307.6

Net cash flows from investing activities (262.7) (84.1) (136.7) (131.7) (256.9) (48.2) (53.0) (49.6) (155.4) (168.1)

Net cash flows from financing activities 269.7 (45.9) (16.4) (37.4) (136.8) (32.0) (95.2) (220.0) (162.1) (98.9)

Net cash flows from operating activities $ 152.2 $ 149.7 $ 197.1 $ 396.4 $ 174.1 $ 272.3 $ 232.8 $ 133.1 $ 153.0 $ 307.6Purchase of plant, property, and equipment (36.1) (83.1) (97.1) (106.8) (73.0) (45.5) (57.9) (55.3) (72.0) (97.4)

Free Cash flows 116.1 66.6 100.0 289.7 101.1 226.8 174.9 77.8 81.0 210.2

Net earnings attributed to Valmont Industries, Inc. $ 94.4 $ 228.3 $ 234.1 $ 278.5 $ 183.9 $ 40.1 $ 173.2 $ 116.2 $ 94.4 $ 153.8

Adjusted net earnings attributed to Valmont Industries, Inc.1 N/A $ 162.3 N/A $ 295.1 $ 187.7 $ 131.7 $ 137.6 $ 158.4 $ 123.0 N/A

Free Cash Flow Conversion - GAAP 1.23 0.29 0.43 1.04 0.55 5.66 1.01 0.67 0.86 1.37Free Cash Flow Conversion - Adjusted N/A 0.41 N/A 0.98 0.53 1.71 1.27 0.49 0.66 N/A

1) Reconciliation of Net Earnings to Adjusted FiguresNet earnings attributed to Valmont Industries, Inc. $ 94.4 $ 228.3 $ 234.1 $ 278.5 $ 183.9 $ 40.1 $ 173.2 $ 116.2 $ 94.4 $ 153.8Change in valuation allowance against deferred tax assets — (66.0) — — — 7.1 (20.7) 41.9 — —Impairment of long-lived assets — — — 12.2 — 61.8 1.1 — 28.6 —

Reversal of contingent liability — — — — — — (16.6) — — —Other non-recurring expenses (non-cash)

18.18.1 — — — —Deconsolidation of Delta EMD, after-tax and NCI — — — 4.4 — — — — — —Noncash loss from Delta EMD shares — — — — 3.8 4.6 0.6 0.2 — —

Adjusted net earnings attributed to Valmont Industries, Inc. $ 94.4 $ 162.3 $ 234.1 $ 295.1 $ 187.7 $ 131.7 $ 137.6 $ 158.4 $ 123.0 $ 153.8

($M)

1 Adjusted earnings for purposes of calculating FCF conversion may not agree to the adjusted net earnings. The difference is due to cash restructuring, debt refinancing, or other non-recurring expenses which were settled in cash in the year of occurrence.

Years of rapid raw material cost inflation

GAAP 1.23X 0.29X 0.43X 1.04X 0.55X 5.66X 1.01X 0.67X 0.86X 1.37X

Adj. N/A 0.41X N/A 0.98X 0.53X 1.71X 1.27X 0.49X 0.66X N/A

2010 – 2019 Free Cash Flow1 ($M)

116

67100

290

101

227

175

78 81

210

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

10-yr Avg. $144MGAAP 1.31XAdj. 0.91X

Historical FCF Conversion by Year1

1 We use the non-GAAP measure of FCF, which we define as GAAP net cash flows from operating activities reduced by capex. We believe that FCF is a useful performance measure for management and useful to investors as the basis for comparing our performance with other companies. Our measure of FCF may not be directly comparable to similar measures used by other companies.


Strong Free Cash Flow Throughout the Cycle

Calculation of Adjusted EBITDA and Leverage Ratio

Certain of our debt agreements contain covenants that require us to maintain certain coverage ratios. Our Debt/Adjusted EBITDA may not exceed 3.5X Adjusted EBITDA (or 3.75X Adjusted EBITDA after certain material acquisitions) of the prior four quarters. See “Leverage Ratio “ below.

YTD26-Sep-20

Net earnings attributable to Valmont Industries, Inc. $ 144,778Interest expense 40,748Income tax expense 50,613Depreciation and amortization expense 83,361EBITDA 319,500Cash restructuring expenses 5,678Impairment of goodwill and intangible assets 16,638Impairment of property, plant, and equipment 2,811Adjusted EBITDA $ 344,627

Debt $ 795,937Leverage Ratio 2.31

Debt $ 795,937Cash 443,055Net Debt 352,882Leverage Ratio 1.02

($000s)


2018-2019 Financials Retrospectively Adjusted from LIFO to FIFO Change

Valmont Industries, Inc. Retrospectively Adjusted from LIFO to FIFO Change

First Quarter 2019 Second Quarter 2019 Third Quarter 2019 Fourth Quarter 2019 Fiscal Year 2019As Previously Retrospectively As Previously Retrospectively As Previously Retrospectively As Previously Retrospectively As Previously Retrospectively

(in 000's, except earnings per share) Reported Adjusted Reported Adjusted Reported Adjusted Reported Adjusted Reported AdjustedCost of sales 527,010 527,512 520,457 522,695 514,254 517,053 512,759 517,035 2,074,480 2,084,295 Operating income 55,104 54,602 63,712 61,474 63,863 61,064 55,041 50,765 237,720 227,905 Income tax expense 12,427 12,302 13,961 13,402 13,763 13,063 10,056 8,987 50,207 47,753 Net earnings attributed to Valmont Industries, Inc. 36,481 36,104 41,397 39,719 40,144 38,045 35,747 32,540 153,769 146,408 Net earnings per diluted share $ 1.66 $ 1.64 $ 1.90 $ 1.82 $ 1.85 $ 1.75 $ 1.66 $ 1.51 $ 7.06 6.72

First Quarter 2018 Second Quarter 2018 Third Quarter 2018 Fourth Quarter 2018 Fiscal Year 2018As Previously Retrospectively As Previously Retrospectively As Previously Retrospectively As Previously Retrospectively As Previously Retrospectively

Reported Adjusted Reported Adjusted Reported Adjusted Reported Adjusted Reported AdjustedCost of sales 529,444 528,363 507,406 505,755 514,352 511,572 547,662 543,282 2,098,864 2,088,972 Operating income 63,960 65,041 63,670 65,321 38,360 41,140 36,290 40,670 202,280 212,172 Income tax expense 12,532 12,802 14,405 14,818 9,091 9,786 7,107 8,202 43,135 45,608 Net earnings attributed to Valmont Industries, Inc. 39,281 40,092 32,960 34,198 4,448 6,533 17,662 20,947 94,351 101,770 Net earnings per diluted share $ 1.72 $ 1.76 $ 1.46 $ 1.51 $ 0.20 $ 0.29 $ 0.80 $ 0.95 $ 4.20 $ 4.53


Summary of Effect of Significant Non-Recurring Items on Reported Results

($000s)



($000s)



Engineered Support Structures• Cash restructuring expenses to exit product

lines within Access Systems

Utility Support Structures• An asset impairment charge for a steel utility

facility that is held-for-sale

• Valuation allowance against an international renewable energy account receivable

Coatings• Severance and other cash expenses mostly

attributed to closing a small galvanizing site in North America

($000s)


third quarter earnings presentation...3q 2020 segment revenue and segment summaries 4 october 22,...

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